2025 (8) TMI 1162 - HC - Customs

Applicant to appear for appraisal and release of 116g gold bar on payment; Section 108 statement denied ownership

HC ordered that, since no SCN or Order-in-Original has been issued and principles of natural justice were violated, the applicant shall appear before the ... Seeking directions to release the gold bar weighing 116 grams - neither SCN nor the Order-in-Original has been passed in this matter - violation of principles of natural justice - Statement of the Petitioner under Section 108 of the Act has been placed on record which reveals that the Petitioner claimed that the gold bar did not belong to him - Petitioner submits that under Section 110, the goods have to be released to the person from whom the same have been seized - HELD THAT:- Considering the fact the SCN has not been issued till date, let the Petitioner appear before the Department on 16th September, 2025 for appraising the goods and release of the gold bars upon payment of applicable duty. It is also made clear that if the Customs Department wishes to initiate any other proceedings against the Petitioner, it shall be at liberty to do so in accordance with law, and nothing contained in this order shall impede initiation of such proceedings in any manner. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether the detained gold bar must be released to the person from whom it was seized under the Customs Act in view of the statutory provision for release of seized goods. 2. What is the legal effect of a statement recorded under Section 108 of the Customs Act, 1962 in proceedings for detention/seizure when no Show Cause Notice or Order-in-Original has been issued. 3. Whether the absence of a Show Cause Notice and an Order-in-Original affects the department's power to appraise and release seized goods on payment of duties, and whether directions for release will preclude initiation of other proceedings by the department. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Release of seized goods to the person from whom they were seized (statutory release provision) Legal framework: The Court considered the statutory provision under the Customs Act that goods seized may be released to the person from whom they were seized (referred to in submissions as Section 110 of the Act) subject to conditions prescribed by law. Precedent Treatment: No earlier judicial precedent was cited or relied upon in the hearing; the Court proceeded on the statutory text and factual matrix. Interpretation and reasoning: The Court observed that the Petitioner had been intercepted and the gold bar recovered from his possession. The Petitioner's statement under Section 108 acknowledged possession and an admission of omission/commission, and further agreed with the department's description and quantity. In the absence of a Show Cause Notice or an Order-in-Original, the Court directed the Petitioner to appear before the Customs Department for appraisal and directed release of the gold bars upon payment of applicable duty. Ratio vs. Obiter: The direction to release the goods on appraisal and payment of duty constitutes the operative ratio insofar as the Court applied the statutory release principle to the facts (possession + admission + absence of SCN/OIO) and ordered release subject to conditions. Conclusion: The seized gold bar is to be appraised and released to the person from whom it was seized upon payment of applicable duty; the statutory release mechanism was applied by the Court in these circumstances. Issue 2 - Legal effect of a statement under Section 108 when no SCN/OIO has been issued Legal framework: Section 108 statements (statutory statements recorded by Customs) were placed on record and their content considered by the Court. The decision examined the evidentiary and practical effect of such a statement in the absence of formal departmental adjudication. Precedent Treatment: No specific precedents were invoked; the Court treated the Section 108 statement as a relevant admission by the person from whose possession the goods were recovered. Interpretation and reasoning: The Court noted that the Section 108 statement contained an express admission that the recovered item did not belong to the declarant, had been given by a third party, that the declarant attempted to clear via the Green Channel without payment of duty, and that the declarant agreed with the department's description and quantity and did not require a Show Cause Notice. The Court placed the statement on record and used it as part of the factual matrix in directing appraisal and conditional release. Ratio vs. Obiter: The use of the Section 108 statement in the Court's instant direction is ratio for the present order (it informed the Court's decision to permit release upon payment). There is no broader holding on the general admissibility or determinative effect of Section 108 statements in all Customs adjudications beyond their evidentiary weight here. Conclusion: A Section 108 statement admitting possession and omission/commission was accepted by the Court as a material admission and informed the direction to appraise and release the goods; absent departmental adjudication, the statement supported a conditional release rather than foreclosing subsequent proceedings. Issue 3 - Impact of absence of Show Cause Notice/Order-in-Original on departmental powers and on court-ordered release; liberty to initiate further proceedings Legal framework: Administrative adjudication under the Customs Act normally proceeds through issuance of a Show Cause Notice and, after adjudication, an Order-in-Original. The Court considered the consequences of these steps not having been taken at the time of hearing. Precedent Treatment: The Court did not rely on prior case law; it directed relief consistent with statutory processes and safeguards. Interpretation and reasoning: The Court recorded the Respondent's affirmation that no SCN or Order-in-Original had been passed. Given that state of the record and the Petitioner's Section 108 admission, the Court exercised its supervisory jurisdiction under Article 226 to order appraisal and release upon payment of duty. Importantly, the Court expressly preserved the department's statutory rights by stating that if the Customs Department wished to initiate any other proceedings against the Petitioner, it remained at liberty to do so in accordance with law and that nothing in the order would impede such initiation. Ratio vs. Obiter: The core holding is the conditional release in light of procedural incompleteness (absence of SCN/OIO) and the preservation of the department's right to proceed - this is ratio for the present decision. The clarification that the department may initiate other proceedings is directly operative and not mere obiter. Conclusion: The absence of a Show Cause Notice/Order-in-Original justified the Court's direction for appraisal and conditional release on payment of duty; the Court explicitly preserved the department's statutory right to initiate further proceedings, ensuring the order does not operate as a bar to future departmental action. Cross-References and Practical Directions - The Court required the Petitioner to appear before the Customs Department for appraisal on a specified date and directed release of the gold bars upon payment of applicable duty (cross-referencing Issues 1-3). - The Court accepted the Section 108 statement as material to the relief granted but did not treat the statement as substituting for departmental adjudication; departmental proceedings remain available (cross-reference between Issue 2 and Issue 3). - The order disposes of the petition subject to the stated directions and expressly preserves departmental powers to initiate other proceedings in accordance with law.